§431:6-311 - Real property owned.

§431:6-311 Real property owned. (a) An insurer other than a life insurer may own and invest, or have invested inits home office and branch office buildings, any of its funds in an aggregateamount not to exceed twenty per cent of its admitted assets unless approved bythe commissioner, or if a mutual or reciprocal insurer, not to exceed twentyper cent of its admitted assets nor an amount as would reduce its surplus,exclusive of such investment, below the minimum required surplus for the class,or combination of classes, of insurance authorized, unless approved by thecommissioner. A life insurer may own and invest, or have invested in its homeoffice building and branch office buildings, any of its funds in an aggregateamount not to exceed twenty per cent of its admitted assets, or fifty per centof the excess of its admitted assets over its liabilities, other than capitalstock if a stock life insurer, whichever is the lesser amount. The home officeor branch office buildings may be constructed upon leasehold estates. However,if a life insurer has been licensed less than five years, a prior approval fromthe commissioner shall be required before investment may be made in home officeor branch office buildings.

(b) An insurer may invest any of its funds, inan aggregate amount not exceeding ten per cent of its assets, in real propertyacquired for the production of income under the following terms and conditions:

(1) The investment in any single parcel of realestate shall not exceed five per cent of its admitted assets;

(2) The investment shall produce sufficient income toamortize any loan secured by a mortgage on the real property;

(3) If any improvements exist on or are to beconstructed on the real property for lease to lessees, the improvements shallremain on the property during the period of the lease, with provisions when theimprovements are put upon the property at the cost of the lessee that at thetermination of the lease the ownership of the improvements, free of liens,shall vest in the owner of the real estate; and

(4) During the term of the lease the tenant shall payall taxes and assessments levied on or against the real estate, includingimprovements, shall keep and maintain the improvements in good repair, andshall provide and maintain for the benefit of the lessor fire insurance on theimprovements in an amount at least equal to the insurable value of theimprovements, or at least equal to the amount invested by the lessor in thereal estate, whichever is less.

(c) An insurer may invest any of its funds, inan aggregate amount not exceeding thirty per cent of its assets in realproperty including the realty set forth in subsections (a) and (b), for realtyacquired for the purpose of leasing the same to any person for a period of notless than twenty years, or in real property already leased for an unexpiredperiod of not less than fifteen years of an original period of not less thantwenty years, under the following terms and conditions:

(1) The lessee, at the lessee's own cost, shallerect, or have already erected, thereon free of liens a building or otherimprovements costing an amount at least equal to the value of the real estateexclusive of improvements; but if the lease be entered into simultaneously withthe purchase of the real estate, the lessor may agree to erect the improvementson the real estate;

(2) The improvements shall remain on the propertyduring the period of the lease, with provisions when the improvements are putupon the property at the cost of the lessee that at the termination of thelease the ownership of the improvements, free of liens, shall vest in the ownerof the real estate;

(3) The lessee, during the term of the lease, or theunexpired period of the lease if the property is bought subject to the lease,shall pay to the owner of the real estate rent in an amount as will enable theowner to amortize the investment at or before the normal termination of thelease, or at or before the end of fifty years should the lease, or theunexpired period of the lease, be for a longer period than fifty years; and

(d) Real property acquired pursuant tosubsection (c) shall not be treated as an investment unless and until therequired improvements have been constructed and the lease agreement enteredinto, and the amount to which the real property shall be treated as aninvestment shall not exceed the amount actually invested reduced each year inthe amounts as will suffice to amortize completely the investment at the normaltermination of the lease or at the end of fifty years should the term of thelease, or the unexpired period of the lease, be for a longer period than fiftyyears.

(e) An insurer may own real property acquiredin satisfaction or on account of loans, mortgages, liens, judgments, or otherdebts previously owing to the insurer in the course of its business, and mayinvest or have invested in an aggregate amount not exceeding three per cent ofits assets in other real property, and in the repair, alteration, furnishing,or improvement thereof, as follows only:

(1) Other real property requisite for itsaccommodation in the convenient transaction of its business if approved by thecommissioner;

(2) Real property acquired by gift or devise;

(3) Real property acquired in exchange for realproperty owned by it. If necessary in order to consummate an exchange, theinsurer may put up cash in an amount not to exceed twenty per cent of the fairvalue of its real property to be so exchanged, in addition to the property;

(4) Real property acquired through a lawful merger orconsolidation with it of another insurer and not required for the purposesspecified in subsection (a) and subsection (c)(1); or

(5) Upon approval of the commissioner, in realproperty and equipment incident to real property, requisite or desirable forthe protection or enhancement of the value of other real property owned by theinsurer. [L 1987, c 347, pt of §2 as superseded by c 348, §13; am L 1996, c 65,§1]